Michigan Collection Law Blog published By Michigan Creditor Lawyers Nitzkin & Associates

The U.S. Court of Appeals for the Fourth Circuit just decided Sayyed v Wolpoff and Abramson. Sayyed was a consumer that was delinquent on his discover card. Wolpoff sued for the balance due plus attorneys fees. In pursing its client's case, Wolpoff served interrogatories that did not state "This is a communication from a debt collector." Moreover, Wolpoff filed a Motion for Summary Disposition. Sayyed countersued for violation of the FDCPA claiming that Wolpoff sued him for an amount larger than Discover was entitled to collect. Wolpoff defended on the basis of common law immunity from all statements made in pleadings to the court. The court held that the FDCPA trumps such common law immunity. The court narrowly construed the FDCPA notice that a communication is from a debt collector exception to formal pleadings under 15 USC 1692e(11).

Wolpoff argued that the pleadings that it had sent were not transmitted to the debtor, but rather the debtor's attorney and thus, even if FDCPA applies to pleadings, the communication was not sent to the consumer. The court would have no part of that. The court noted that FDCPA defines "communication" broadly. Thus a communication to debtor's counsel is the same as a communication to the debtor.

Wolpoff did advance one very interesting argument that I had never seen before. It contended that FDCPA cannot apply to the litigation process because the entire purpose of this process is to arrive at the truth through the clash of the adversarial process. I liked this argument. The court found it interesting as well, but alas, it was not enough to save Wolpoff at the end of the day. The court find that inasmuch as the Congress specifically and narrowly exempted formal pleadings from the notice requirement under FDCPA, that the rest of the statute must apply to the rest of the litigation process.

Wolpoff also contended that it relied upon its client's affidavit in support of its Motion for Summary Disposition. While the District Court bought this argument and dismissed Sayyed's case, the court of appeals reversed this decision. The court of appeals held that the district court should not have dismissed this claim out of hand, but rather it needed to make a finding of fact (which is impermissible on a Motion for Summary Disposition) as to whether Wolpoff is entitled to use the bona fide error exception of the FDCPA. This would probably necessitate a trial.

In my opinion, this is a scary case, but it is well reasoned and properly decided.

Lessons to be learned by Debt Collection Attorneys:

1. Although you do not have put the phrase "This is a communication from a debt collector" on pleadings, the FDCPA applies in all other respects to the litigation process including your pleadings. If you sue for an amount that is not allowed by contract or law, you bear the consequences.

2. Thus a communication to debtor's counsel is the same as a communication to the debtor.

3. Do rely upon the bona fide error exception to the FDCPA to get you out of an FDCPA lawsuit quickly. Whether you are entitled to use this defense is a question of fact. Questions of fact are usually resolved after a long and expensive trial.